Forexpros – Natural gas futures fell sharply on Wednesday, trading at the lowest level since September 2009 as ongoing concerns over warm winter temperatures and worries about growing U.S. inventory levels continued to dampen sentiment on the heating fuel.
On the New York Mercantile Exchange, natural gas futures for January delivery traded at USD3.193 per million British thermal units during U.S. morning trade, plunging 2.6%.
It earlier fell by as much as 2.75% to trade at USD3.182 per million British thermal units, the lowest since September 11, 2009.
The January natural gas contract has lost nearly 11% since the beginning of December, as forecasts for warmer-than-normal winter weather was likely to limit heating demand.
The Commodity Weather Group said earlier that temperatures across the U.S. East Coast states will be at least five degrees above-average from December 19 to December 23.
“Widespread warming is expected to dominate the 1-10 day range yet again with only some minor fluctuations possible,” the weather group said in a report.
According to the U.S. National Weather Service, the daily average temperature in New York for December was 4.3 degrees above normal through December 13.
Natural gas prices have closely tracked weather forecasts in recent weeks. Above-normal winter temperatures reduce the need for gas-fired electricity to heat homes, dampening demand for natural gas.
Meanwhile, markets were looking forward to the U.S. Energy Information Administration’s weekly report on U.S. natural gas stockpiles for the week ended December 9 on Thursday.
Early injection estimates range from a decline of 60 billion cubic feet to 92 billion cubic feet. The five-year average stockpile change for the week is a drop of 142 billion cubic feet, according to U.S. Energy Department data.
Gas futures typically climb during the winter months, as temperatures fall and demand for heating fueled by natural gas rises. But mild weather coupled with high production levels have kept prices depressed in recent weeks.
Global financial service provider Barclays said in a report Tuesday that, “In the near term, there appears to be no bottom for the front contract price as it continues to fall on weak seasonal heating demand.”
Elsewhere on the NYMEX, light sweet crude oil futures for delivery in January plummeted 3.05% to trade at USD97.08 a barrel, while heating oil for January delivery tumbled 1.6% to trade at USD2.882 per gallon.
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